By Jim Rohrer
Every single year since 1969, except for a brief three-year period between 1998 and 2001, our U.S. government has spent more than it has taken in. Every American who can add and subtract understands that this is not a good situation, yet our politicians are increasing spending at even higher rates, while our receipts are declining as a percent of our gross domestic product (the total of what we produce). In 2010 we spent 25 percent of our GDP, while bringing in only 14.9 percent of GDP.
Every businessperson who has faced a situation in which business revenues were less than expenses knows exactly what to do: Reduce spending at once. Don’t dilly-dally; do it right away. Then, after the bleeding has stopped, the business musta figure out how to increase its revenues. No business ever cut costs alone to achieve profitability.
But here’s the rub in Washington. Democrats refuse to cut costs in any significant way, while Republicans refuse to raise revenues. Republicans won’t raise taxes one nickel, and they seem determined not to work seriously on the economy before the election. Democrats want to spend even more on another stimulus.
A fiscal commission was appointed to determine what to do. It was co-chaired by Republican Alan Simpson and Democrat Erskine Bowles. The committee’s recommendations contained a lot of common-sense items, including the following:
1. Making structural changes in Social Security that would not affect current recipients but would cut costs in the future.
2. Serious tax reform, including capping expenditures and revenue at 21 percent of GDP.
3. Medicare and Medicaid cuts and provisions to force rate increases to avoid losses.
4. Discretionary spending cuts, including a wage freeze on federal worker pay and elimination of jobs by attrition.
5. Defense cuts in ways that would not injure our ability to defend ourselves, including canceling some weapon systems that the services don’t even want.
6. Tort reform to reduce Medicare and Medicaid fraud.
This bipartisan group worked diligently and voted 11-7 to endorse the plan, but Congress had set up a nearly impossible barrier decreeing that a supermajority of 14 of 18 votes would be necessary. Well, so much for the process of a bipartisan agreement to address this problem. Never mind that former Joint Chiefs Chairman Adm. Michael Mullen identified our fiscal crisis as our No. 1 security risk. Former FED chairman Alan Greenspan said: “The plan is ideal because it allows political compromise, even though it won’t completely resolve the fiscal problems the country faces.”
But here’s the point: The reason the plan got nowhere is precisely because it features political give and take. It would mean that facing the nation’s serious problems is more important than politics. In Washington, nothing is more important than politics, but here in an American town like Evergreen, the opposite is true. In Evergreen, the country and its well-being are paramount. Let’s stay resolved that we are in charge, not the politicians.
Jim Rohrer of Evergreen is a business consultant and author of the bi-books “Improve Your Bottom Line … Develop MVPs Today” and “Never Lose Your Job … Become a More Valuable Player.” Jim’s belief is that common sense is becoming less common. (More about Jim at www.theloyaltypartners.com.)